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Grizzly Research in Sep 2023 uncovered that the TEMU app, developed by Pinduoduo, includes spyware that exfiltrates extensive user data. With over 100M downloads in the U.S. and Europe, TEMU poses a serious security threat. PDD's financial transparency is also in question, heightening concerns. Recently Arkansas AG sued Temu, claiming it uses app to steal user data and poses a major security risk.

🛡️ Security Threat Uncovered

• Grizzly Research released a report on September 6, 2023, alleging that the TEMU app, developed by Pinduoduo (PDD), functions as spyware.

• According to security experts, the app has hidden features that allow it to steal extensive user data, including location, camera access, and personal files.

• “TEMU’s software can locally compile malicious code, making it difficult to detect,” says Mikko Hyppönen, a cybersecurity expert. Despite these risks, TEMU continues to operate widely in the U.S. and Europe.

🛡️ Arkansas AG Takes Legal Action

• Arkansas Attorney General Tim Griffin is suing Temu and its parent company, PDD Holdings. Griffin announced the lawsuit on June 28, 2024, accusing Temu of using "deceptive tactics" to harm consumers. He claims Temu is "a data theft company" rather than just an online marketplace.

• Temu, the western arm of Chinese retail giant Pinduoduo, offers users credits for purchases through mini-games or referrals.

• Griffin's lawsuit is based on a forensic investigation by Grizzly Research, which calls PDD Holdings "fraudulent" and claims Temu contains hidden spyware.

• The lawsuit cites Google and Apple's temporary removal of Temu and Pinduoduo apps for similar reasons.

• According to Griffin, Temu collects excessive data beyond what's needed for a shopping app, including camera, location, and contact information. This unauthorized data collection is allegedly monetized, posing privacy risks to users.

Similarweb new report “The State of Ecommerce” unveils key insights into the ecommerce industry, showing how various sectors are performing and growing.

📊 Traffic Overview

• Similarweb’s report analyzed five main sectors: Beauty & Cosmetics, Luxury & Jewelry, Consumer Electronics, Marketplaces, and Fashion & Apparel.

• Marketplaces dominated with 200B visits, up 0.8%.

• Beauty & Cosmetics and Luxury & Jewelry saw consistent growth, faster than previous years.

📈 Traffic Trends

• As economic challenges persist, consumers continue to seek small indulgences through Beauty and Cosmetics products.

• Fashion & Apparel is seeing some slight growth of 1.3% in the past 12 months, meaning that Consumer Electronics stands out as the only category continuing to decline, with a 2% drop in traffic YoY.

• The COVID-19 pandemic initially boosted electronics purchases, but shifting priorities have led to stagnation in this category since 2021.

🌍 Global Overview

• Of the top 25 countries by visits, 15 of them saw growth with 10 seeing declines.

• Vietnam saw the highest growth at +24% (6.4B visits), followed by Russia at +10% (20.8B visits).

• Large European countries and India experienced declines (2-3% and -8%, respectively).

The latest SimilarWeb report also goes deep into Marketplaces performance and highlights exciting developments. Their detailed study unveils notable trends, opportunities, and key players in this competitive industry.

📊 Global Marketplace Trends

• Global marketplace growth increased by 0.8% YoY.

• Traffic dropped by 5% in 2022 but started to recover in 2023.

• India fell to 8th rank, below the UK and Germany.

• The US holds 24% of global traffic despite a 1.3% decline.

• Canada entered the top 10, now 10th with a 2.4% share after a 3.5% rise.

🌍 Opportunities in Growing Markets

• Russia leads with a 12% increase in visits, recovering from past declines.

• Netherlands, Italy, and France show strong performance in the EU.

• Canada, Mexico (6% growth), and Colombia (3% growth) are promising in the Americas.

• Japan joins the top 10 with significant traffic and 3% growth.

🚀 Fastest Growing Platforms

• Temu grew 839% in a year to 4.3B visits, now 5th largest globally.

• AliExpress grew 10% YoY to 5.6B visits, driven by various factors.

• Other rising stars: Ozon.ru, Shoppe, Amazon, Wildberries.

🌐 Temu's Impact on AliExpress

• Temu’s US launch caused initial drops in AliExpress traffic.

• AliExpress rebounded since Feb 2023, benefiting from Temu's presence.

• Temu attracts Baby Boomers and Gen X with low prices.

• Nearly half (48%) of AliExpress visitors are 34 years or younger.

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▶🇺🇸 Amazon pushes hard for Prime sign-ups on Prime Day. Amazon Prime Day on July 16-17 offers discounts and free trials of Amazon services, pushing non-Prime members to join. 75% of US consumers already have Prime, and Amazon wants more. Special deals on its devices and free service trials aim to attract new members.

▶🇪🇺 Amazon faces EU scrutiny on algorithms and ads. The EU has asked Amazon for more information about its recommender systems and ad transparency as part of its Digital Services Act enforcement. Amazon faces high stakes with potential penalties of up to 6% of its $574.8B revenue.

▶🇪🇺 Shein and Temu must detail EU law compliance. Shein and Temu must respond by July 12 to the European Commission's request for proof of Digital Services Act compliance. This includes how they meet the Notice and Action mechanism and other user protection measures.

▶🇪🇺 EU to End Duty-Free Imports from China’s Temu & Shein. The European Union is planning to impose customs duties on low-cost imports from Chinese online retailers like Temu, Shein, and AliExpress. Currently, items valued under €150 ($161) are duty-free, but this could change soon to counter the surge of cheap imports.

▶🇺🇸 Qoo10 Launches 'Wish+' to Boost International Sales. This move aims to promote Asian products in the U.S. and Europe. Benefits include access to K-Avenue, WisFarm, and free shipping.

▶🇩🇪 Zalando & AboutYou counter Shein with new logistics strategy. About You will offer items directly from factories. Zalando relies on its logistics network. Shein reported $45B sales, Temu's parent $37B in 2023.

▶🇱🇹 Vinted slapped with $2.6M fine over data breaches. Lithuania fines Vinted $2.6M for mishandling user data, following complaints from France and Poland. The company denies the charges and plans to appeal, arguing the fine exceeds current legislation and industry standards.

▶🇫🇷 La Redoute CEO to resign end of July. Philippe Berlan, CEO of France's La Redoute, will resign at the end of July. He has been with the company since 2012 and became CEO in March 2022. An interim CEO will be appointed until a successor is found.

▶🇺🇸 ThredUp and Savers face 29% decline in sales. The U.S. secondhand apparel market hit $43B in 2023 and is expected to grow 11% annually through 2028. Despite this, companies like ThredUp and Savers face profitability challenges, with both seeing around a 29% decline in sales this year.

▶🇮🇹 Benetton restructures, aiming to save jobs. Benetton, led by CEO Claudio Sforza, plans a restructuring to preserve jobs. They're negotiating with trade unions to cut working hours by 40% for 1,000 employees. Unions propose a 20% cut instead.

▶🇺🇸 Gap's Strategy Sparks Hope for Legacy Retail. Gap, led by CEO Richard Dickson, is revitalizing its brand with a focus on core identities and digital transformation. Ecommerce sales are growing faster than overall sales, and new CTO Sven Gerjets aims to modernize tech operations.

▶🇨🇳 Shein and Temu drive up air shipping costs. Shein and Temu's global success in fast fashion caused a 40% increase in air cargo rates from China in June. The rise in rates is unusual for this time of year and is impacting other businesses needing to ship goods.

▶🇺🇸 Grubhub lands Amazon and Starbucks contracts. Grubhub, with just 8% market share, secured contracts with Amazon and Starbucks. These partnerships aim to expand delivery options and offer cost-effective services, beating bigger competitors like Uber Eats.

▶🇩🇪 Delivery Hero hides $2.3B loss in creative numbers. Delivery Hero's AGM on June 19th showed profits but hid a $2.3B loss for 2023. Sales grew to $9.9B, up 16%, but far below past growth. Investors must dig into reports to see true financials.

▶🇺🇸 Instacart enhances delivery with new drop-off feature. Instacart's new updates include a drop-off feature for uncollected orders, an in-app scanning tool for multi-order batches, and alerts for pets at residences. These changes aim to make deliveries safer and more efficient for workers.

▶🇮🇳 Swiggy's new 'Eatlists' feature simplifies food sharing, letting users create and share food recommendations. CEO Rohit Kapoor highlights the communal aspect. Users can now save their favorite dishes and share them via social media.

▶🇩🇪 Lieferando sees a boom in employee councils. Since the pandemic, Lieferando couriers have secured more rights, resulting in over 200 council members in 24 committees. Despite better organization, labor disputes are common, with potential strikes looming if demands are not met.

▶🇬🇧 Tesco adds new retailers to Marketplace. Tesco expands its Marketplace by adding new retailers. Categories include home, baby, toys, pets, electricals, drinks, and cards. Notable names include Charles Bentley, Tommee Tippee, Robbie Toys, Mars Petcare, Litecraft, and Diageo.

▶🇩🇪 Hood.de launches new integrations and redesign. New integrations include Plentymarkets, JTL, Tradebyte, and Channel Pilot Pro. A new site design will launch in August, enhancing user experience and keeping low sales fees.

▶🇪🇺 Meta's “Pay or Consent” Model Under EU Scrutiny. The EU Commission informed Meta that its new “pay or consent” ad model violates the DMA. Users must pay or consent to personalized ads, which the Commission finds non-compliant. Meta must offer a less personalized equivalent service.

▶🇪🇺 Booking threatens to leave European Union. Booking Holdings CEO Glenn Fogel criticizes EU rules allowing hotels to offer lower prices on their sites, calling it a competitive disadvantage. The $135B company might leave the EU due to these regulations.

▶🇦🇺 ShipStation Unveils New Features for Ecommerce in Australia. These include inventory sync, deliver-by date, harmonization code import, checkout rates, and custom labels, driving efficiency and enhancing customer experiences.

▶🇨🇳 Taobao boosts Ele.me with new traffic portal. Alibaba’s Taobao now sends more traffic to Ele.me via a homepage portal, enhancing “instant commerce.” This follows reports of a potential Ele.me sale, which Alibaba denied.

▶🇿🇦 Shoprite's new eCommerce boosts wholesale buyers. Shoprite launches an eCommerce service for its Cash & Carry stores, providing automated online shopping with free delivery.

▶🇺🇸 Etsy bans sex toys, sellers predict revenue loss. Etsy's new policy banning sex toys from July 29 has upset sellers. They fear significant revenue losses. Etsy says the ban is to protect users and align with industry standards. Sellers, however, feel betrayed and worry about finding new platforms and employment.

▶🇬🇧 Channel 4 invests £3M in Fy! partnership. The partnership aims to leverage Channel 4's home improvement shows to enhance consumer shopping experiences. Fy! acquired Trouva in April to expand its market reach.

▶🇰🇷 Oasis to acquire e-commerce leader 11Street. The deal includes a 100% stake swap for 25% of Oasis and shares in its logistics arm. Oasis is valued at $1.1B, while 11Street is valued at $500M. This will boost Oasis' customer base and international reach.

▶🇫🇮 Cluby raises $3.1M to connect restaurants digitally. Founded by Kalle Ek, Joel Leino, and Pekka Koskinen, the company has over 500 restaurants and 100K users on its app. COVID-19 boosted digital adoption, and now Cluby offers an easy way for smaller venues to compete with big chains. Funds will help expand across Europe.

▶🇺🇸 Rocksbox ends rentals, starts selling jewelry. Rocksbox, a jewelry company owned by Signet Jewelers, is ending its rental subscription service and rebranding as an e-commerce site selling new and pre-owned jewelry. This shift aims to attract customers who prefer buying over renting.

That’s all. See you next week in the 🌀Maze!

Your guide through the maze

Artur Stańczuk Chief Strategy Officer at Packhelp, the leading European packaging marketplace. Previously worked ~8 yrs at Bain & Co. In the past, Digital Transformation Director at the leading Polish convenience chain Żabka and Entrepreneur that co-launched 3 startups